Underwriters are under pressure to generate profits for the first time since the mid-1990s, as firms scramble to secure their finances after the impact of the World Trade Centre attacks.
Giants such Zurich and Royal & SunAlliance (R&SA) are leading a return to fundamentals by setting stiff targets for their underwriters and claims managers.
Many insurers have not made group-wide profits on underwriting for several years and have relied on income from investments instead.
That strategy was left in tatters by the stock market crash following the September 11 terrorist attacks, the continuing volatility of world markets and the lack of market investors.
Zurich aims to force a profit out of its underwriting business by cutting its combined ratio - the total of an insurer's costs on claims and expenses - by up to four points for next year.
Zurich head of business development for personal insurances John McCheyne said: "The investment environment problems mean we will be looking to achieve a 100% ratio, or even lower.
"The right price for the right risk, price increases where possible, flexible commission to the broker and working with the broker to ensure wider `before the event' cover sales will all be factors in getting the operating ratio right.
"We expect Lloyd's capacity to reduce and remove low price and niche capacity."
He predicted: "The battle for the broker will be selling service and advice against the direct market."
He said brokers would have to position themselves as the insurers' best value deal in the harder new market conditions.
It is understood that R&SA is abandoning its combined ratio of 103 - meaning it paid out £103 for every £100 it received in premiums.
Standard and Poor's managing director and insurance analyst Rowena Potter said the stock market crash and its continuing volatility had increased pressure on underwriters.
"The underwriting part of the equation becomes much more important, but companies will still be competing for market share," she said.
"The balance has moved towards more rigorous underwriting, rather than trying to keep prices down in order to maintain market share."
She predicted the shift in emphasis would favour insurers with a more cautious approach to their underwriting.
"Those who have gone for market share and have grown hugely in the last couple of years, paying out losses from cash flow, will have a problem unless they put their premiums up significantly," she said.
Insurance analyst David Wharrier of Fitch ratings agency said some companies had not made underwriting profits for three years.
He said: "Historically, insurance companies have tended to make losses on underwriting and offset it from investment returns. The focus is now back on underwriting to improve returns."
The pressure would make underwriters demand more information to accurately price risks while managers would minimise costs.
R&SA is centralising its reinsurance purchasing as part of its drive to manage costs.
Different regions had previously arranged reinsurance cover separately.
It is understood the new approach is aimed at maximising cover and value in a reinsurance market dominated by rising rates and shrinking capacity.
